Brazilian Industry Wants Urgent Reduction of Interest Rates

Brazil’s two biggest industrial trade associations,  did not like the decision by the Monetary Policy Committee (Copom) to leave the country’s basic interest (Selic) at 19.75% per year.

The industry associations are Fiesp (Federação das Indústrias do Estado de São Paulo – São Paulo Industrial Federation) and Ciesp (Confederação das Indústrias do Estado de São Paulo – São Paulo Industrial Confederation)


In a note, Fiesp said the decision effectively buried the possibility of growth in the first semester and threatens growth for the rest of the year. Ciesp came out with a call for the immediate reduction of the Selic so the country could return to growth.


Paulo Skaf, the Fiesp president, said he saw the decision as the beginning of a reduction in the Selic, following a steady rise in the rate since last September. Skaf also pointed out that economic indicators show that the first half has already gone down the drain.


“We have to save the rest of the year. And the only way we can do that is by reducing interest rates quickly. This is necessary because the market takes time to react to changes in the Selic,” he declared.


Skaf went on to say that the government itself exerts inflationary pressure. He cited a government decree that raised discretionary spending by US$ 1.65 billion (US $4 billion) between now and August.


“Even if good results with the primary surplus permit some slack, the government should not take advantage of that fact and increase its spending.


“There are better things they could do with the money, such as debt reduction. Ironically, government debt is aggravated by the interest rates they approve,” he said.


Meanwhile, Boris Tabacof, a Ciesp director, said he sees no reason for the government to keep interest rates at 19.75% annually.


“Such high interest rates only increase uncertainty, inhibiting investments,” said Tabacof in a note where he added that instead of depressing consumption to control inflation it is necessary to expand supply which will require more investments.


“We could lower interest rates and have renewed growth. The political situation should not interfere with that possibility,” he concluded.


Agência Brasil

Tags:

You May Also Like

Rio Police Accused of Holding Barbecue to Celebrate Murder of a Tough Judge

In the wake of another murder of an authority in Brazil the Brazilian Association ...

In Brazil’s Trial of the Century Culture of Impunity Should Play Big Role

In the first session dealing with the mensalão case, technically, Penal Case 470, the ...

São Paulo, Brazil, Goes on a Shopping Spree

Paulistanos, the residents of São Paulo city, Brazil, have great plans for consumption in ...

Brazil’s Singing Diva Maria Rita Opens New York’s Brazilian Film Festival

One does not need to understand Brazilian culture in order to appreciate this annual ...

Brazilian Stocks Keep on Tumbling for Third Day

Latin American and, in particular, Brazilian stocks struggled to get out of the red ...

Brazil’s Motor Vehicle Production Falls 40%, But Industry Is Pleased

The motor vehicle production in Brazil dropped 7.9% in October, in comparison to September. ...

Navy’s Ship Becomes Showcase of Brazil’s War Industry

The Brazilian Navy’s School Ship will take products made by Brazilian defense industries to ...

Best-seller Books, Plays and Movies

By Brazzil Magazine RIO Se Correr o Bicho Pega, Se Ficar o Bicho Come(If ...

A Full Last Day in Paris for Brazil’s Lula with Several High Level Meetings

On the final day of his visit to France, today, Brazilian President Luiz Inácio ...

Brazil’s VO2Max, a High-Tech Sports Apparel Maker, Looks Overseas for Growth

Sports clothes maker wants to export For Brazilian cyclist Marcelo Torres, from BrasÀ­lia, the ...